Vodafone and O2 to Merge Rival UK Network Assets into Separate Company

The UK mobile networks, Vodafone and O2 have announced plans to combine the basic parts of their network infrastructure to create one national grid running each operator’s independent spectrum.

The two companies already share some elements of their network infrastructure under an agreement that was signed in March 2009.

The companies also expect that the shared network will be able to deploy LTE coverage up to two years before the anticipated regulatory requirement of 98% population coverage by 2017.

Both companies will retain complete control over their wireless spectrum, intelligent core networks and customer data. They will continue to actively compete with each other in all products and services, enabled through the ‘intelligent’ parts of their networks.

A new 50/50 joint venture company will be created through the consolidation of both O2 and Vodafone’s existing basic network infrastructure, including towers and masts, which will be transferred to the joint venture or decommissioned over time. Under the proposals, both companies will have access to a single grid of 18,500 masts representing an increase in sites of more than 40% for each operator. The joint venture will also be responsible for the building of new sites needed to extend coverage into rural and remote areas.

There will be opportunities for the decommissioning of duplicate sites and, as a result, the two companies expect there will be a more than 10% overall reduction in the total number of sites, in the UK, used by the two operators.

Each operator will take the responsibility for design, management and maintenance of the radio equipment as well as local transmission in one half of the country. O2 will manage and maintain these elements in the East (including Northern Ireland and most of Scotland) and Vodafone in the West (including Wales).

The two companies are in discussions with Ofcom and intend to establish the joint venture and network sharing arrangement later this year, following the satisfactory conclusion of those discussions.